Shell signs contracts for Prelude floating LNG project

Shell yesterday signed two contracts with the Technip and Samsung Heavy Industries consortium for the Prelude floating liquefied natural gas (LNG) project off the coast of Western Australia.

The contracts formalize the announcement made by Shell in October 2009 that Prelude is in the engineering and design phase of development.

The first contract covers the front-end engineering design (FEED) elements specific to the Prelude project, taking into account the composition of the gas, local weather conditions and other site specific factors.

The second contract details the terms under which the floating LNG facility will be built, when the final investment decision for the Prelude project is made.

Technip and Samsung will jointly design the 468 m long by 74 m wide floating facility for construction at Samsung's shipyard in South Korea. Delivery is envisaged for 2016 and the contract is estimated to be worth $4 billion to $5 billion

Technip says planning for Prelude is progressing well.

Yesterday’s signing follows a July 2009 master agreement between Shell and the Technip-Samsung consortium to work on the design, construction and installation of multiple floating LNG facilities over a period of up to 15 years.

The floating design will allow Shell to place gas liquefaction facilities directly over offshore gas fields, precluding the need for long-distance pipelines and extensive onshore infrastructure. This provides a commercially attractive approach for developing offshore fields.